Celsius Network reorganization plan focuses on BTC mining

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Celsius Network will only focus on BTC block reward mining under its new reorganization plan after regulators opposed its previous plans.

Following feedback from the Securities and Exchange Commission (SEC), Celsius will begin to transition to a Mining-Only NewCo. https://t.co/VVrLLjQWO8

— Celsius (@CelsiusNetwork) November 21, 2023

The New York Bankruptcy Court approved the collapsed lender’s Chapter 11 plan two weeks ago, unlocking $2 billion held in reserves to its creditors for the first time. However, the Securities and Exchange Commission (SEC) and the Department of Justice (DOJ) opposed some aspects of the plan, including the company’s proposal to engage in staking.

The company now says it has been in talks with the SEC and intends to register the shares in a new publicly traded BTC mining company. The new firm will be owned by Celsius customers.

Celsius further revealed that Celsius’ estate will retain some of the assets it was to transfer to Fahrenheit NewCo and will be monetized by the litigation administrator for the benefit of the creditors. Fahrenheit NewCo is a group consisting of US Bitcoin Corp, Arrington Capital, and other investors that won the auction bid in May.

The company is currently working on the structure of Mining NewCo, the new BTC mining entity, including figuring out its future management. However, it warned that due to the reduction in the scope of the company’s business, the compensation for the executives will be lower than what was previously expected.

However, the customers will be the big gainers. Celsius revealed that under the new plan, “the amount of liquid cryptocurrency to be available for distribution directly to customers will be greater than the amount that would have been distributable had the Debtors moved forward with the Fahrenheit NewCo.”

The company will file a motion to gain approval of the Chapter 11 plan’s modifications by the NY Bankruptcy Court in the coming weeks.

Celsius was one of several digital asset giants that collapsed last year. Once one of the market’s largest ‘crypto’ lenders, its fortunes changed after other intertwined entities began to crumble, starting with Terra’s LUNA and UST tokens. Gross negligence, mismanagement, and fraud would later be unearthed at the firm, which filed for Chapter 11 bankruptcy protection in July last year.

U.S. authorities are still pursuing ex-CEO Alex Mashinsky for fraud and market manipulation through CEL, the company’s native token. His trial is set for September next year, and he’s currently free on a $40 million bond.

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